Elizabeth Holmes Trial: Closing Arguments Are Set to Begin

Prosecutors said Ms. Holmes, the Theranos founder, deliberately chose to lie instead of letting the start-up fail.,

SAN JOSE, Calif. — Fifteen weeks ago at the start of the trial for Elizabeth Holmes, prosecutors laid out a central theme of their case: The founder of the failed blood testing start-up Theranos had deliberately chosen to commit fraud.

“Out of time and out of money, Elizabeth Holmes decided to lie,” Robert Leach, the assistant U.S. attorney who is a lead prosecutor in the case, said at the time.

On Thursday, prosecutors hammered home the same theme in closing arguments. Ms. Holmes had a choice between watching Theranos slowly collapse or lying outright, said Jeff Schenk, an assistant U.S. attorney. In the end, he said, “she chose fraud over business failure.”

The prosecution’s closing arguments followed months of testimony that featured 32 witnesses including Ms. Holmes, as well as the minutiae of financial reports and lab tests. Her case is being closely watched as a referendum on the worst excesses of Silicon Valley’s start-up culture, which prizes change-the-world claims and fast growth. The verdict could influence whether prosecutors pursue similar white-collar criminal cases at a time when tech start-ups are swimming in funding and hype.

The jury of eight men and four women will begin to deliberate the fate of Ms. Holmes once the defense concludes its closing arguments, most likely on Friday. Ms. Holmes, 37, who has pleaded not guilty to nine counts of wire fraud and two counts of conspiracy to commit wire fraud, faces up to 20 years in prison if convicted.

The prosecution’s case boils down to proving one thing: that Ms. Holmes intended to deceive Theranos’s investors, doctors and patients. Proving intent is the hardest part of prosecuting a white-collar criminal trial, said James Melendres, a former federal prosecutor.

“It goes to what was happening inside someone’s mind, which is extremely hard to prove definitively,” he said.

Before Theranos imploded, Ms. Holmes stood out as the rare successful female founder in the male-dominated tech industry. She had founded Theranos in 2003, dropped out of Stanford in 2004 to work on the start-up and raised nearly $1 billion from investors for the company’s supposedly revolutionary blood testing technology.

But a Wall Street Journal investigation in 2015 revealed that Theranos’s technology did not work and that Ms. Holmes appeared to have been courting investors and commercial partners with overblown and misleading claims. The company collapsed in 2018 after voiding millions of its blood tests.

That same year, Ms. Holmes was indicted on fraud charges. Her trial began on Sept. 8 after numerous delays. Prosecutors outlined six main areas of Ms. Holmes’s alleged deception, including lies about the abilities of Theranos’s technology, its work with the military and its business performance.

The government called former Theranos employees to testify that the start-up’s technology regularly failed quality-control tests, returned inaccurate results and could perform only a dozen tests, rather than the hundreds that Ms. Holmes claimed. Doctors and patients spoke about how they had made medical decisions based on Theranos tests that turned out to be wrong.

Prosecutors also showed a set of Theranos validation reports that bore the logos of pharmaceutical companies that had neither prepared nor signed off on the conclusions therein. They showed letters to investors in which Ms. Holmes falsely claimed Theranos had military contracts and emails from employees that said the company hid device failures and removed abnormal blood test results.

In testimony, investors and pharmaceutical executives said that Ms. Holmes’s misleading claims had led them to invest millions of dollars in Theranos or sign contracts with her company.

“The government spent a lot of time putting in evidence about not just one particular alleged misrepresentation, but several,” Mr. Melendres said. “If you line up three, four, five, a half-dozen misstatements, it gets harder for the jury to pull together on anything other than that there was an intentional scheme.”

Last month, Ms. Holmes took the stand and painted herself as a well-meaning entrepreneur who was na?ve and relied too much on those around her. She said she had been emotionally and physically abused by Ramesh Balwani, Theranos’s former chief operating officer and her former boyfriend. Mr. Balwani, who faces identical fraud charges to Ms. Holmes and faces trial next year, has denied the allegations.

On Thursday, Mr. Schenk focused on the facts and evidence, in contrast to Ms. Holmes’s emotional performance on the stand. He walked through the witnesses one by one and outlined each of the 11 counts against Ms. Holmes. At times, he instructed jurors to write down exhibit numbers to refer back to during deliberations.

Over and over, Mr. Schenk highlighted claims Ms. Holmes herself had made, playing a recording of her exaggerating Theranos’s military ties to investors and highlighting inaccurate quotes she gave to journalists. He showed jurors a slide listing her false statements alongside the exhibits that proved she knew they were false.

“She is making false statement after false statement about work Theranos was doing with the Department of Defense in order to get investors to invest,” Mr. Schenk said.

He displayed emails to Ms. Holmes, in which she was informed of problems with the accuracy of Theranos’s technology, and a timeline showing that she forged ahead with the start-up’s commercial introduction nonetheless.

“She was involved; she’s responsible; she knows,” Mr. Schenk said.

In the afternoon, the defense began its closing argument by positing that the government did not tell the full story of Theranos’s relationship with pharmaceutical companies. Kevin Downey, Ms. Holmes’s lawyer, said Theranos had some contracts with pharmaceutical companies and pointed out instances in which she offered to connect investors with the drugmakers, arguing that Ms. Holmes did not intend to deceive investors about those relationships.

“The picture can change quite a good deal as a result of waiting for the full story and listening through the full material,” Mr. Downey said.

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